Environmental Engineering Reference
In-Depth Information
Bring forward the announcement of the widening of EU ETS sector cov-
erage, raising the CO2 price through banking leverage. It would be sensible
to extend the scope of the EU ETS to other sectors including economy-wide
fuel consumption. This extension will improve the ef
-
ciency of the scheme,
as an ef
cient market mechanism is applied to more sectors in the economy.
Applying the EU ETS only to industrial sectors leaves a very important part
of the economy out of the effort for ef
cient emission reduction. This
measure could avoid the promotion of expensive emission reductions in
current non-EU ETS sectors while less expensive reductions are available in
the EU ETS sectors (or vice versa).
If the EU ETS is to be extended to all end consumers of fuel, it is important
to coordinate these measures with fuel tax measures in order for the com-
bination and interaction of each measure to re
-
ect the external cost.
Set additional limitations on the use of international credits in the EU ETS.
-
Cyclical measures for rapid implementation, such as the backloading proposal.
We do not believe that backloading will be an added handicap to the compet-
itiveness of European industry if the necessary additional measures to preserve
that competitiveness are adopted, e.g. strengthening the support measures that
are already set under existing EU State Aid Guidelines which allow compen-
sation for ETS-related increases in electricity prices to prevent the risk of carbon
leakage.
3 Environmental and Energy Taxation
3.1 Description of the European Framework on
Environmental and Energy Taxation
'
is understood to mean a form of taxation that internalises
an environmental cost that is re
Environmental taxation
'
ected in the price of the manufactured good; a
theoretical framework has been developed around this concept.
6
However,
in
de
ning this term it must be remembered that there is an ongoing debate as to what
exactly an environmental tax is, or should be, and whether the tax should seek to
internalise the environmental cost
incurred or alter
the behaviour of
the
stakeholders.
7
6
See, for example, OECD [
25
].
Environmentally Related Taxes in OECD Countries. Issues and
Strategies
, Chap. 1.
7
For an argument in favour of the need for the tax to alter behaviour, see Joskow (1992), p. 54,
for example.
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